Fixing the $100 trillion physical economy: chatting with Maersk and Saint-Gobain

It’s not every day that you get to interview a 357-year-old company founded by a king, and the company that ships 1 out of 6 things moved globally.

In this TechFirst I chat about how we’re going to fix the $100 trillion global economy: make it smarter, make it faster, and make it much, much more planet-friendly. A key step: digital transformation of traditional industry.

This is a session I moderated at Web Summit in Lisbon about a month ago with Ursula Soritsch-Renier, the Chief Digital & Information Officer of Saint-Gobain, and Rotem Hershko, Senior Vice President, Head of Business Platforms for Maersk.

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Transcript: digital transformation and fixing the $100 trillion physical economy

(This transcript has been lightly edited for length and clarity.)

John Koetsier: How often do you get to interview somebody at a company that was founded by a king 357 years ago? Not that frequently. Also, probably not that frequently to be able to interview somebody at a company that ships literally one out of six things that moves on Planet Earth. Hello and welcome to TechFirst. This is the second session that I moderated at Web Summit in Lisbon about a month ago. I was chatting with Ursula Soritsch-Renier, who’s the Chief Digital Officer at Saint-Gobain, as well as Rotem Hershko, who’s the senior VP at Maersk. I think you’ll find it interesting. Enjoy.

Welcome. How are you guys doing? We are gonna talk about something that is very cool — it’s digital transformation. It’s funny, we hear “metaverse, metaverse, metaverse” all the time. You know, it’s kind of about a trillion dollar opportunity as estimates go. The actual world economy is about a hundred trillion dollars. And guess what? It’s where we eat. It’s what we eat, it’s where we live, it’s what we drive around in, all that stuff. We’re gonna talk about that right now and let’s get started. Ursula, give us 30 seconds on you and Saint-Gobain. 

Ursula Soritsch-Renier: So I’m the Chief Digital Information Officer of Saint-Gobain, 357 year old, invented by Louis the 14th who was sick and tired to get… was dependent on Venetian’s glass and mirrors. So we’re now one of the largest construction material manufacturer in the world who concluded last year with almost 45 billion euros, 170,000 employees in 75 countries. 

John Koetsier: How many companies can say they were founded by a king, nevermind a king 357 years ago? That’s amazing. Rotem, 30 seconds on you and Maersk, which everybody knows but maybe not totally.

Rotem Hershko: Yes. So my name is Rotem Hershko and I’m leading the digital transformation at Maersk. Some of you know Maersk is one of the biggest shipping companies in the world for more than a hundred years now. How big? Just to give you some context, one every six things that you see around you right now, one every six things that you have in your home, in your office, was at some point inside a Maersk container. That’s how big. 

A few years ago, our customers approached us and asked for us to lean in and help them with their end-to-end supply chain needs. Not only ocean shipping but also warehousing, and land transportation, and custom, and whatnot. And then we, of course, as a customer-first company, we said, “Yes, lean in” and now we are one of the biggest players in the world in logistics and services. With that expansion to warehouses and air cargo and whatnot came the realization that the only way that we can help these customers end to end, the only way we can optimize their supply chain in the right way is by leaning in into technology. And over the last couple of years, Maersk has become very strong and very big in technology, and I’m very happy to talk about it in the next couple of minutes with all of you.

John Koetsier: Next few minutes, ’cause we’re only on for about 20 here. Ursula, let’s start with you. You’re a 357-year-old construction materials company. A couple decades ago, they might not have known what a CDO is at all. What are you digitizing and why? 

Ursula Soritsch-Renier: Actually the construction industry lost productivity over the last 50 years. It’s the only industry that did not improve and didn’t take advantage of the opportunities out there. And it’s an incredible opportunity to now almost leapfrog technology into that market from an individualization and a personalization where you precut interior walls, where they’re already presorted, you already deliver it per room, you reduce 50% of the installation time, you reduce 30% waste, preserving raw material and energy. And, you know what? It’s good for the margin as well. It is a laser technology to remove three days of a ceiling implementation. It is sensors in order to supervise and understand the drying process of walls. So, it is not that we are having an intelligent mortar to know after 30 years if it is molding or not, but it is this entire surrounding on how you can actually create the productivity with also a labor workforce that is not very highly educated.

So how can you make it as simple as possible, as error-free as possible, while preserving raw material and energy? How can you make it sustainable? It’s a huge topic in the construction market that is 40% of the carbon footprint globally. And so digitalization from a service perspective, from, you know what, just the optimization perspective to really how you build, is an amazing opportunity that we now have going forward as… last thing, you know what? We all need to continue to build, because all of Europe and all of the U.S., they need to save more energy. So we need more insulation, we need an improved environment. And in the rest of the world, there is a severe lack still of housing for people. 

John Koetsier: It’s a really tough challenge because not only do we need to keep building, because there’s many homeless people, especially in the States, but many other countries, poorer countries as well, but also the homes that we have aren’t energy efficient and we’re now to do all that building in a way that is less carbon intensive, is more green, is more friendly to the planet that we live on. So there’s lots of challenges there. 

Let’s talk about challenges of digitization. Everybody agrees we need to. Everybody wants to. Everybody wants to be a smart, fully integrated, digital organization, know where all your stuff is, know where it’s going, know when it’s gonna get there, all that stuff, maintain custody, digital custody. What are some of the challenges? 

Rotem Hershko: Yeah, so I think first we need to acknowledge that deep digital transformation is messy. It doesn’t go in a linear line, and it’s messy. That’s first. Now, a few principles that we have been following at Maersk over the last couple of years that help us to become relatively successful in our transformation is first about the alignment. It’s really important to have an alignment all the way from the top.

I can tell you as an executive at Maersk, I feel very supported by my board of directors and we are all on the same page about the need for transportation and transformation. Sometimes we do argue, obviously, but it’s mostly about how can we move faster, how can we expedite, and it’s not about whether we need transformation. So, first is about alignment. 

The second very important lesson for us is that it’s not the best idea to task one team in your company to lead transformation, being the tech team, being a transformation office. We perceive transformation as a change in the DNA of the entire company. When we think transformation at Maersk, we are changing the end-to-end customer experience all the way from how we create lead generation, to contracting and booking, and pricing, and post purchase experience. Transformation is all over the place and the entire company is leaning in. Of course, the tech team has a lot to do with the digital transformation, but it shouldn’t be a task of one team. 

And the last thing I want to say is about the hat of long-term thinking and a long-term commitment that one needs to put in order to deeply transform a company. The ROI is not always around the corner. We at Maersk, when we decided to transform, we went all in. We’re modernizing our entire tech infrastructure. We’re moving to the cloud the entire business. We’re launching tens of new microservices. And so it’s all in, and we need, and you need to have a lot of patience and do it the right way. If you didn’t do it the right way, it’s gonna be a house of cards and with a small shake in the industry, it’s all going to collapse.

John Koetsier: I’m just listening to you and I’m going like… the whole company, top to bottom, every team, every person, every process, every customer touch, everything you… it’s a small job. I mean, it’s obviously very easy, right? [grinning]

Rotem Hershko: Yeah. We sleep every day between two to four, we take some nap ’cause it’s so easy. Of course.

John Koetsier: Ursula, let’s talk to you. What are the key ingredients that you see from Saint-Gobain’s point of view for a successful digital transformation? 

Ursula Soritsch-Renier: It’s actually known that by now digital transformation projects are failing more than ever. ERP implementations failed. So we’re up in the 80s… 

John Koetsier: That’s ’cause it’s so easy. 

Ursula Soritsch-Renier: It’s so easy. 

John Koetsier: Yeah. [chuckling]

Ursula Soritsch-Renier: Exactly. Yes. But the thing is also for me, digital transformation, we are all talking about we need to innovate and we need to be creative. I don’t think that’s the problem. I think that we all have an incredible wealth of creativity in all of our companies, and we have an array of pilots and prototypes and ideas everywhere. For me, successful digitalization to not become a waste of money is that you pick, that you prioritize which ones are really needle movers of all of these ideas. And all of you have plenty of these, right? And sometimes they’re with an Excel database or just really handmade. So you need to pick, you prioritize, and then you scale. You execute at scale for the bottom line of the company. And that prioritization and that execution makes a difference between a successful digital transformation or failure. 

John Koetsier: We’re gonna go to Rotem in a second and ask about talent, and the right talent you need, but let’s just continue on this for a second here. It’s challenging. It’s difficult. It’s hard. It’s a long road. How do you maintain the motivation and energy as you go forward? 

Ursula Soritsch-Renier: You need to have quick wins. You need to have successes in between. It is a learning by doing. I still don’t believe that there is this revolution in these large companies. It is an evolution. But the experimentation, the kind of like preparedness of all these parties — it is people, process and technology. It’s very old actually, but you just gotta do it. And this also sticking it out is actually extremely important. Or dropping it, you know, early enough. 

John Koetsier: It’s like one of the keys to success for people, right? Showing up every single day and doing the work. Talking about that, Rotem, talk about talent. Do you need to bring in outside talent? Do you need to just work with the people you have? What’s the right plan and mix there? 

Rotem Hershko: Yeah, that’s a great question. And so, I think that the meta point is that in order to be successful in a digital transformation, deep digital transformation, you need to inject into your organization digital native talent. And when I say digital native talent, I don’t need any digital native talent. You need to bring the best of the best. We at Maersk, we have been really successful and really lucky over the last couple of years to inject hundreds — hundreds of Silicon Valley best. We have now executives and leaders from the Google and Amazon and Microsoft and Expedias of the world, and they’re all joining our journey. And it’s not an easy task to bring them over, but the ROI is definitely positive. So you need talent and you need the best talent. Then, just to touch a point, you know, it’s easier said than done sometimes. 

The reason we were able to attract this talent is mostly because we were able to sell them and tell them about the impact that they may have in a company like Maersk. We’re changing an industry. We’re changing the world. We’re so key to the zero carbon emission agenda that everybody’s going after. We at Maersk, we [are] gonna hit zero carbon emission by 2040. We just bought 18 humongous ships that can now emit zero carbon. And so these talents in Silicon Valley and other places, they really want to change the world, and our ability to explain and share our vision was one of the key reasons we’re able to bring them over. 

Ursula Soritsch-Renier: Can I add to that? I would like to add from my perspective, because yes, you need the outside blood. Yes, you need another perspective. But you know what? We have companies that are old that are working in a known manner where there is a maturity or a not maturity in different areas, where you have awareness or not awareness. And the thing is you need to fit it to the environment, because you need to always push as hard as you can but you cannot run harder than the organization can bear or, you know what, digest. And so for me, it was important to add these new people, but I call it the “constructive tension” — the constructive tension between the new wild cowboys hitting the ones, “We did this 20 years now along the same way.” And that expertise is also important to ground it. I’m not disputing this.

Rotem Hershko: I couldn’t agree more with that and so… 

Ursula Soritsch-Renier: You know, because it is about this, you need to make it work. It cannot stay an Excel database from a prototype or a pilot. 

John Koetsier: But it’s worked for 20 years! [laughs]

Ursula Soritsch-Renier: Yeah, exact… well, no, the new guys come in with their ideas and you need to ground them. 

John Koetsier: And that’s why you need executive people who are behind it, right?

Ursula Soritsch-Renier: You need that execution.

John Koetsier: So they can push that and go for it. Rotem, I have to underline something you said. You brought over hundreds of people, you said, from Amazon — you’re ex-Amazon — from…

Rotem Hershko: I’m ex-Amazon.

John Koetsier: …Google, from other places. And you look at that and you think, “I’m just an ordinary company, or I’m a company in a conventional industry. How can I attract somebody from Google?” They have employment for life. They have free massages. They have — it’s really good — they have slides. I’ve gone down slides at Google Headquarters, right? All that stuff. But you know what? 90% of the engineers at Google work on ad tech. They work on ad tech, the ways of figuring out how to make 50 cents more for my eyeballs when I visit their page. That’s not very inspiring, honestly. And you sold them an inspiring vision. That’s pretty cool. 

Rotem Hershko: Thank you. And so I’ll be less, uh, excited to comment about Google. I have deeply respect to them. But I can tell you for us, the impact that talent can bring to the table, there’s this environmental mind that everybody now has. It’s a great selling point and one of the reasons we’re able to successfully attract hundreds of these talents into Maersk.

John Koetsier: Ursula, we’ll turn to you. I heard that Web Summit’s giving us another 20 minutes… 

Ursula Soritsch-Renier: I just wanna add…

John Koetsier: Oh you gotta add? Go, go, go.

Ursula Soritsch-Renier: But that is my pitch, you know? What do you wanna do as the 101 thousandth employee in Google? And what kind of impact do you have there on a daily basis? But if you come to a construction market that is zero digitalized, we’re gonna leap and frog and bound and jump.

John Koetsier: Yeah, yeah [someone clapping in the audience]. You got a clap there, that’s awesome. We’ll amplify that. Last question here — case study disease. There’s a digital transformation project, a case study gets written up. It’s amazing, it’s incredible, and it’s 0.325% of a company’s business. How do we avoid case study disease and do the full job over the full enterprise?

Ursula Soritsch-Renier: You know what? I think that at a certain point in time it is also a belief war. For example, do you invest into data governance? You can calculate yourself rich, you can calculate yourself poor. With all these initiatives, I think it is actually in the end a very smart, intuitive, intellectual process where you actually bet on. Where you see from a customer perspective interest, where also you wanna actually develop customer’s needs, right? They’re not all there yet, maybe. Where you would, based on trends, anticipate where it will head to. For example, okay, we gonna go into a shortage of skills. Yeah? Contractors are not having a university degree, but they need to work faster and more efficient. So, how do you need to make it? Well, you need to make it modular. You need to make it very clear A goes to A, B goes to B… and so there’s some, you need to kind of look a little bit into the future and weigh it and prioritize. 

John Koetsier: Rotem, maybe weigh in on that a moment? 

Rotem Hershko: Yeah. For me, the only way to be successful and not to create a case study or just move the needle a little bit starts, as we mentioned, from top alignment, leaning in, long term thinking, aspiration to invest, and change the company, change the culture. Just give you a few examples, at Maersk over the last couple of years — and I have the opportunity to observe a little bit as an outsider coming from the U.S., coming from Amazon — the entire company started to be customer centric. The entire company started to be data driven. The entire company changing the mindset. And for me, these are the main evidence of the transformation. It’s end to end. It’s across the company. It’s around the world. We’re operating in more than a hundred countries around the world, so it’s not a small task for the team at headquarters. But it’s all start from the top.

John Koetsier: Love it, love it, love it. Let’s end here. Very brief answer… is digital transformation a bet-the-company type of initiative? Yes or No.

Ursula Soritsch-Renier: Yes. 

Rotem Hershko: Yes. 

John Koetsier: Great stuff. Thank you for being here. You made it out to Pavilion 5? How did you get here? I didn’t know there was land out here. Great job for you guys.

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